Overview

Madagascar, a country in southern Africa located in the Indian Ocean east of Mozambique, is the fifth largest island in the world, with a land mass of 587,000 square kilometers and 24.24 million inhabitants in 2016. Its economy is based essentially on agriculture, particularly vanilla, and tourism. Given its unique biodiversity, it is very vulnerable to the consequences of climate change.

Political Context

The founding of the Senate in February 2016 completes the establishment of all of the democratic institutions of Madagascar’s Fifth Republic. The upper chamber comprises 63 senators, two thirds of whom are elected and one third appointed by the President of the Republic. The Constitution now provides that the President of the Senate, Honoré Rakotomanana, will serve as acting president in the event of the resignation, removal or death of the President of the Republic.

During the April 2016 cabinet shuffle, the President, Hery Rajaonarimampianina, appointed Olivier Mahafaly Solofonandrasana as Prime Minister. His main task is to implement the National Development Plan, which focuses on three areas: improving governance, fostering economic recovery, and expanding access to basic social services.

Madagascar received a commitment of $6.4 billion in support of its development projects (2017-2020) during the Conference of Donors and Investors organized by the Malagasy government in Paris in December 2016 with the support of the African Development Bank, the World Bank Group, and the United Nations Development Programme (UNDP). In addition, an envelope of $3.3 billion in investment was announced by the private sector.

Economic situation

The Malagasy economy has been gradually improving and the medium-term outlook is encouraging. Gross domestic product (GDP) growth is expected to reach 4.1% in 2016, exceeding the average rate of 2.6% recorded over the past five years. In 2016, the economy was led by the expansion of the tertiary sector, public works programs, and the recovery in the primary sector, which was aided by favorable weather conditions and higher vanilla prices. Control over inflation and the improvement in the external balance owing to greater inflows of direct investment reinforced economic stability.

However, with an extreme poverty rate of 77.8% in 2012, Madagascar is ranked among the poorest countries in Africa.

Social context

Although Madagascar made some progress in the achievement of the Millennium Development Goals in the 2000s, the political crisis from 2009 to 2014 seriously undermined that progress. Today Madagascar’s education, health, nutrition and water access outcomes are among the poorest in the world.

The country’s development challenges are immense:  90% of the population is poor; per capita GDP stands at $420; one child in two under the age of five suffers from chronic malnutrition; and Madagascar was ranked 154th out of the 187 countries in the 2015 Human Development Index.

Madagascar is also one of the 10 countries most at risk from the effects of global warming.

Last Updated: Jan 10, 2017

The partnership between the World Bank and Madagascar dates back to September 1963, with the first project being approved in 1966.

In February 2016, the World Bank allowed Madagascar to access the International Development Association’s Turnaround Facility, a financial mechanism for fragile countries that have shown a willingness and the capacity to change their development trajectory. With this decision, the World Bank recognized the considerable challenges facing the country if it is to emerge from political crisis, end the historical cycle of political fragility, and promote sustainable, inclusive, and resilient development.

The progress noted in 2016 enabled the World Bank Group to announce a total commitment of $1.3 billion at the Conference of Donors to finance its Country Partnership Framework (CPF) during the period 2017-2020. This amounts includes (i) the final IDA 17 financing amount totaling $262 million (including a $65 million grant in budgetary support and a $35 million grant to finance the social protection program in southern Madagascar); (ii) a new envelope of $802 million under IDA 18; and (iii) $330 million in financing for private investment from the International Finance Corporation (IFC), a branch of the World Bank Group dedicated to the private sector.

The World Bank Group’s current portfolio in Madagascar includes 13 investment operations for a total commitment of $758 million, of which $400 million have not yet been disbursed. The transportation and infrastructure sectors represent the largest proportion of the commitments (22%), followed by education, health and nutrition (21%), fiscal support (21%) and rural development (17%).

After conducting a systematic diagnostic of the economic and social situation (Systematic Country Diagnostic—SCD), the World Bank is developing a new Country Partnership Framework, which will be published in March 2017. It will take into account the recommendations of the SCD, and establish the following five priorities: (1) improving governance; (2) consolidating public finances with a view to improving public services and financing key investments; (3) introducing policies that can release the potential of the private sector; (4) developing human capital; and (5) combating poverty, specifically by improving the living conditions of the rural poor.

The Country Partnership Framework is also aligned with the government’s priorities as set out in its 2015-2019 National Development Plan and the actions already taken by the country’s other technical and financial partners.

Last Updated: Jan 10, 2017

The World Bank support for Madagascar is aimed at promoting investment and fostering inclusive growth by improving social indicators. The projects implemented have had the following results:

  • Between 2008 and 2014, 7,500 hectares of irrigated land have been rehabilitated.
  • Rice productivity has increased from 2.5 tons per hectare in 2008 to 4.8 tons per hectare in 2014 in the main rice producing regions, directly benefiting 8,300 farm families.
  • In 2015, almost 2 million children received school kits; in October 2016, 3.3 million children began the school year with a new school kit.
  • Since 2015, approximately 600 schools have provided meals for about 112,800 children. This strategy has proven to be very effective in ensuring that children continue to attend school, particularly in the southern part of the country, which was affected by drought.
  • In 2015 and 2016, 47,000 teachers received training.
  • Thanks to the production and distribution of textbooks, the number of textbooks increased from 1 for every 25 children to 1 per 2 children at the beginning of the 2016 school year.
  • In 2014 and 2015, 11,600 schools received subsidies to cover their operating costs, to purchase of school equipment, and to finance maintenance and repair work. Parent associations monitor the use made of these grants and receive training to familiarize themselves with the use of service report cards.
  • 248,000 pregnant or breastfeeding women and 1.3 million children under the age of five have received free essential medical care by means of a system of coupons or exemptions.
  • Approximately 1.8 million children of school age received preventive treatments against neglected tropical diseases, particularly parasite infections (intestinal helminths). This has also helped to reduce the school absenteeism rate.
  • 202,500 children have been vaccinated against diphtheria, tetanus and polio.
  • In 2013, 400,000 beneficiaries participated in cash for work activities in the context of post-disaster intervention programs.
  • By end-2016, approximately 40,000 households will receive family allowances each month to encourage them to send their children to primary school and 32,000 other households will participate in cash for work activities intended to improve the resilience of the local population to climate change.
  • In the southern part of the country, 347 health centers providing basic care have been renovated (installation of solar energy refrigerators to preserve vaccines, for example).
  • 100,000 property titles have been issued since 2006.

Last Updated: Jan 10, 2017

Throughout the crisis (2009-2014), in the context of the resolution process led by the Southern African Development Community (SADC) and the African Union, Madagascar’s development partners have endeavored to harmonize their strategic advice and operations, particularly in the areas of economic management, rural development, education, health, and transportation. This intensive cooperation is continuing today and, since the end of the crisis, the Malagasy authorities have been encouraged to ensure sectoral coordination. The African Development Bank and the World Bank are working together to assess and strengthen the Malagasy public procurement system so that it can be used in projects financed by international aid.

Last Updated: Jan 10, 2017


LENDING

Madagascar: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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